Crypto Notebook

TiTi Protocol
TiTi Protocol

Multi-asset reserve algo-stablecoin

TLDR

TiTi-protocol is a 100% collateral-backed stablecoin. The Protocol maintains its peg to $1 via timely adjustment to the supply of TiUSD in the TiTi-AMM, which is the place users mint/redeem TiUSD. This timely adjustment mechanism is called ReOrder, which is triggered under certain condition, and because of ReOrder, TiTi does not rely on external arbitraguer. The governance token is called TiTi. TiTi staking and liquidity farming (as an LP to TiTi-AMM) rewards additional TiTi, Trade Fee, and Slippage Income from ReOrder.

Design Breakdown

Users stake in collateral in the TiTi-AMM to mint TiUSD. Collaterals are put into further utilization

Upon request, users can redeem collateral in the TiTi-AMM.

All additional revenue generated are NOT given back to user, but are part of Protocol Fee, which are distributed to holders and LPs

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ReOrder

This is how TiTi remains peg: through automatic mint/burn of TiUSD - facilitated by the protocol, not arbitraguer - based on Asset-to-TiUSD ratio atm

In the situation thatPrice of TiUSD >1, the Protocol will mint TiUSD to TiTi-AMM (out of thin air) and inject into the orderbook, maintaining a 1:1 Asset-to-TiUSD value ratio.

Note, users must stake in collateral to buy TiUSD from AMM, so during normal time, this "out of thin air" value will always be met ≤ 100%

In the situation thatPrice of TiUSD < 1, two situations happends

Define: Reserve Ratio (RR) = CryptoAsset _{collateral} / TiUSD_{Circulation}

If RR > 100%, TiUSD will be burned to maintain 1:1 Asset-to-TiUSD value ratio

If RR < 100%, first, price feed will become TiUSD = RR (e.g. RR=98%, TiUSD = $0.98). Then, funds from Rainy Day Fund will inject into TiTi-AMM until RR >100%. All subsequent slippage and protocol fee will be used to help RR recovery. The protocol also utilizes future revenue contracts to manage risk, basically giving owners X% of future PAV value for immediate liquidity.

Breakdown of Rainy Day Fund: it is crucial to recognize that with ReOrder, it is often that we see price of TiUSD > $1, but only for a tiny little (probably resulting in $10 USDC -> 9.99 TiUSD). This means the protocol only needs to reserve $9.99 USDC, and the remaining $0.01 USDC now becomes the PAV (Protocol Added Value). Part of PAV is sent to Rainy Day Fund.

Since TiTi is multi-asset based, how TiTi avoida death spiral upon asset volatilty (because lower asset price means lower avg-TiUSD price, and higher slippage)? Solve viaHuge Slippage upon volatility

ReOrder will be triggered in extreme situations (like 1 TiUSD = $0.97)

Game theory: anyone fearful of failuer will exit position and face huge slippage, which enlarges PAV, which helps maintain peg. Thus, ppl will want to wait for others to exit and TiUSD return peg.

It is important to note that ReOrder occurs according to these rules

Regular ReOrders: The Protocol will carry out ReOrders every half an hour;

Price deviation ReOrders: When the deviation of the TiUSD price relative to the price of $1 exceeds a specific threshold, be it 3%, ReOrders will be automatically triggered;

Market Maker Fund (MMF) Movement: When investors participate in or exit from Market Maker Fund, ReOrders will be automatically triggered.

This is a separate arm in the architecture, and is NOT the Market-AMM money, and participation here is different from liqudity farming in the TiTi-AMM, although all money in the MMF will be used for market-making. Key difference is that MMF users does not suffer impermanent loss, but I also suspect they receive less reward.